Dominion Mortgage Pros

When it comes to securing a mortgage in Edmonton, being self-employed can add a layer of complexity to the process. At Dominion Mortgage Pros, we understand that freelancers and business owners have unique financial situations that traditional income earners may not face. But don’t worry! With the right approach and knowledge, you can successfully navigate the mortgage approval landscape, and we’re here to guide you through it.

Proving Your Income

The first step in securing a mortgage approval is proving your income. As a self-employed individual, you may not receive a regular paycheck, which makes it crucial to present your finances clearly. Here are some practical tips to help you demonstrate your income effectively:

• Gather Documentation: Lenders will require proof of income, usually from your last two years of tax returns. Make sure you have these on hand. Along with your tax returns, you might also need your Notice of Assessment (NOA) from the Canada Revenue Agency.
• Bank Statements: Including bank statements showing consistent deposits can greatly help to demonstrate income stability. Lenders like to see a regular flow of funds, which speaks to your earning capacity.
• Credit Score: Maintaining a good credit score is essential—lenders look closely at your credit history. If you have excellent credit (typically 680 or higher), you’re likely to have more mortgage options.

Managing Debt

While proving income is crucial, how you manage your debt is equally important. As self-employed individuals might take on business loans or credit, here’s how you can showcase your financial responsibility:

• Debt-to-Income Ratio: Generally, lenders prefer a debt-to-income (DTI) ratio of around 44% or less. This means your monthly debt payments shouldn’t exceed 44% of your gross monthly income. Keep track of your expenses and make efforts to reduce any unnecessary debts before applying for a mortgage.
• Stable Financial Practices: Consistent management of your bills, such as ensuring you’re timely with your payments, can positively influence your credit score. It demonstrates your reliability and financial responsibility.
• Avoid New Debt: Before applying for a mortgage, avoid taking on new debt unless absolutely necessary. New inquiries or loans can negatively affect your credit score, which might concern lenders.

Securing Mortgage Approval

Now that we’ve covered the groundwork of proving income and managing debt, let’s dive into some key steps for securing mortgage approval:

• Get Pre-Approved: Before you start home shopping, seek out a pre-approved mortgage. This step is vital because it gives you a clearer picture of what you can afford. Dominion Mortgage Pros can help you find a lender that understands the nuances of self-employment and can guide you through the pre-approval process.
• Work With a Mortgage Broker: Having an Edmonton mortgage broker on your side can be invaluable. Brokers have access to various lenders and can help you find the best mortgage product suited to your financial situation. They understand the challenges that self-employed individuals face and can advocate for you.
• Consider Alternative Lenders: If traditional lenders aren’t open to self-employed applicants, don’t panic! There are alternative lenders willing to offer mortgages to freelancers and business owners. Often, these lenders focus more on your overall financial picture rather than strict employment categorizations.
• Down Payment Knowledge: Know that a larger down payment can increase your chances of approval. It reduces the lender’s risk and can potentially lead to better interest rates. In Alberta, if you can put down 20% or more, you may avoid the added cost of mortgage insurance.

Insights into the Canadian Mortgage Market

The Canadian mortgage market has evolved over the years, especially in response to the rise of self-employment. According to a recent report from the Canadian Mortgage and Housing Corporation (CMHC), self-employment continues to grow in Canada, with about 15.7% of the workforce being self-employed in 2021.

This shift has prompted lenders to adapt to the changing landscape, with more options becoming available for self-employed individuals. At Dominion Mortgage Pros, we stay updated on these trends and the latest Canadian mortgage programs to ensure you receive the best possible guidance.

Conclusion

In summary, while being self-employed presents unique challenges when it comes to obtaining a mortgage in Edmonton, it’s by no means impossible. By gathering documentation of your income, managing your debts responsibly, and getting pre-approved with the help of a knowledgeable Edmonton mortgage broker, you set yourself up for success.

With the right support and preparation, securing a mortgage is within your grasp. Dominion Mortgage Pros is here to back you up every step of the way in your journey towards homeownership. Together, we’ll navigate the mortgage world and make your dream of owning a home a reality.